Permissionless vs. Permissioned Blockchains - An Argument Worth Having?

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Satoshi Nakamoto’s whitepaper outlines a vision for a peer-to-peer payment system that runs on decentralized architecture and has no use for an authoritative middle-man. The idea of a permissioned blockchain was nowhere to be seen. (In fact, the word blockchain was not actually mentioned in the whitepaper at all.)

JPMorgan took that vision and created Quorum, a private, enterprise-level blockchain designed for corporate use, with an emphasis on strict privacy settings. They weren’t, of course, the only ones.

The permissioned vs permissionless argument has divided the blockchain sector, and those divisions can often get heated. Is there room for both?

Permissionless Blockchains Represent The Heart and Soul of DLT

Distributed ledger technology’s debut was, of course, the Bitcoin blockchain’s genesis block, which famously includes a reference to a bank bailout:

To many, permissionless blockchains are the pure implementations of the technology. They represent freedom from censorship and the fractional reserve system, as well as the stifling influence of government heavy-handedness and corporate power. They are the technological expression of disillusionment with the status quo and a thirst for political and financial autonomy.

But Permissioned Blockchains Represent Its Commercial Mind

Permissioned, or enterprise, blockchains are those operated and controlled by a company or a consortium with a particular purpose in mind. There are permissioned ledgers being developed for use in logistics, supply chain management, fintech, and inventory tracking.

By default, enterprise blockchains are private and access to them is restricted to those who need to use them. Their interest is not the pursuit of decentralization, but efficiency. They are not burdened by, or proponents of, political pursuits like libertarianism. Their intention is deployment at the enterprise level.

To some, ideology falls by the wayside when use case suitability is considered. As former JPMorgan employee and now Clovyr founder Amber Baldet argues, “Permissioned doesn’t necessarily equal enterprise and public isn’t just for the proletariat.”

Some Things Simply Need To Remain Private

There are few companies in the world that would place sensitive commercial information onto a publicly accessible database. On the one hand, it is somewhat cheeky for advocates of privacy and permissionlessness to deny the technology to corporate actors because they’re not using it the ‘right way’.

Having said that, those that promote the distributed in DLT may have accidentally stumbled across an unlikely (and unwitting) ally in Nouriel Roubini, who dismisses permissioned uses of distributed ledger technology:

Calling this a Blockchain is a joke: it is private, "permissioned & trusted", not distributed, not based on a consensus mechanism & all managed by IBM in a centralized way. Calling"Enterprise DLT" a Blockchain is a joke. It is a centralized database
https://t.co/p1Lza0kkY4

— Nouriel Roubini (@Nouriel) October 8, 2018

Are Blockchains Misnamed?

BABB, a blockchain company that aims to bank the world’s unbanked, has a CTO with a whole different take on the argument. Gaurav Rana is a believer in permissionless blockchains, writing in October 2018 that:

“The underlying basis of the technology consisted of a ledger that could be appended but never retroactively modified. The lack of central control over the system and the immutability of the ledger form the core characteristics of this technology, which are more accurately categorized as byzantine fault tolerant systems (BFTs).”

– Gaurav Rana, BABB CTO

Rana believes permissioned and centrally controlled blockchains have no place in the sector, while also arguing that ledgers that aren’t actually blockchains, such as Nano and IOTA, are truer to the “ethos of decentralization and immutability.”

For Rana, ledgers that use DAGs and Tangles and are not actually chains of blocks, are closer to blockchains-by-nature than centrally controlled, permissioned blockchains. He proposes the term “time chain” as a more appropriate descriptor of the technology.

Maximalism, Dogma, And The Rise of Logic

Regardless, maximalism on either side is not necessarily helpful. And few are going to play by whatever rules a permissionless or permissioned disciple makes anyway. Hybrid permissioned/permissionless blockchains and sidechains add to the complexity of the dichotomy, which looks increasingly less black-and-white.

Baldet summed it up nicely when she told Fortune in June last year “Really, it should just be about information residing where it makes sense and creating security boundaries that are logical.”

If the anti-establishment logic is followed to its natural conclusion, it would seem self-evident that advocates of decentralization have no place denying others the right to use a technology they find useful in any way they want.

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